STATE FOR EB/TPP/MTA/IPE/HUGHES/URBANSTATE FOR WHA/MEX/GOMEZSTATE PASS TO USTR FOR MELLE/MCCOY/SHIGETOMISTATE PASS TO JUSTICE FOR CCIPS/KOUAME AND OPDAT/TRUEBELLSTATE PASS TO COMMERCE FOR ITA/MAC/ONAFTA/WORDSTATE PASS TO ITA/MAC/IPR/WILSONCOMMERCE PASS TO USPTO FOR RODRIGUEZ/BERDUT/MORALES

1. (SBU) Two recent successes in Mexican IPR enforcement effortswarrant highlighting in a front-channel cable. Mexican customsofficials who attended a training program organized by the Embassyin Manzanillo in early September have since employed the detectiontechniques learned and have detained 30 containers of counterfeitgoods at Mexico's port of Lazaro Cardenas. Separately, Mexico'sFDA-equivalent agency led an unprecedented raid on a chain ofpharmacies in Cancun, and shut down seven for distributingcounterfeit pharmaceuticals and endangering the general public.Both these enforcement efforts are deserving of high praise and areencouraging signs of increased vigilance. However, more needs to bedone to protect IPR in Mexico. We will continue our training andcooperative efforts so as to ensure additional successes. ENDSUMMARY.

2. (U) The Embassy, together with the Department of Justice (DOJ)and the Mexican Customs Administration (Aduanas), held a four-daytraining seminar in Manzanillo from September 8-11 for Mexicancustoms and law enforcement officials on criminal enforcement anddetecting, detaining, and deterring the importation of pirated andcounterfeit goods (see reftel). Two of the customs officials inattendance were from the southern Pacific Coast port of LazaroCardenas. Lazaro Cardenas is slightly smaller than Manzanillo,Mexico's largest port. In 2008, it handled 20 million tons of cargo,including more than half a million twenty-foot equivalent units(TEUs), or standard intermodal containers, mostly from China andelsewhere in Asia.

3. (SBU) The two officials took the fresh insights and valuabletechniques they learned from our training program, and employed themin their customs duties in Lazaro Cardenas. They had the expresspermission of the customs director, who himself participated in aseparate DOJ-sponsored training program in July, which afforded hima tour of the Port of Baltimore and the IPR Coordination Center inWashington, D.C., to sensitize him to the importance of intellectualproperty protection and enforcement as well as expose him to thepotential in Mexico for increased efforts to combat intellectualproperty violations.

4. (SBU) The actions of these Lazaro Cardenas customs officialsresulted in the detection and seizure of 20 TEUs - almost 300 tons -of counterfeit apparel and accessories bearing the marks of Prada,Chanel, Dolce & Gabbana, NIKE, Abercrombie, American Eagle, Peanuts,Hello Kitty, Dior, Armani, Hollister, Ed Hardy, and many others -all in less than one month. According to Jaime Martinez, AduanasAdministrator of Operations, ten additional containers ofcounterfeit goods were detected in the same manner and seized latelast week. All 30 TEUs originated in China.

5. (SBU) A grateful Martinez (another recipient of USG training)told EconOff he credits the USG-sponsored training for enabling hisofficers to make these historic seizures. He commented that theseseizures have been so significant that the shipping company toldAduanas that those ships that had already left China bound forLazaro Cardenas with similar containers are now making stops eitherto offload these containers or rerouting them to other ships.Central America, and not Mexico, was the final destination foralmost all of the seized containers.

6. (SBU) In a separate event, the Mexican Federal Commission for theProtection of Sanitary Risks, or COFEPRIS (the MexicanFDA-equivalent), raided several Yza chain pharmacies in Cancun inearly October and closed seven for distributing counterfeit Cialisand other medicines. The operation was done in coordination withthe Office of the Attorney General of the Republic (PGR) and theMexican Institute of Industrial Property (IMPI - counterpart to theU.S. Patent and Trademark Office). Yza is a well-known pharmacychain with over 100 stores in Quintana Roo, Campeche, and Yucatan.

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As part of their compensation package, PEMEX employees in thisregion of Mexico receive coupons to purchase medicines from Yza.

7. (SBU) Cialis manufacturer Eli Lilly provided COFEPRIS with keyinformation; according to their General Counsel, Eli Lilly beganreceiving reports almost a year ago from doctors in Quintana Roowhose patients were complaining that their prescribed medicine wasnot working. After tests of the medicine demonstrated it was indeedcounterfeit, Eli Lilly built an airtight case and presented it toCOFEPRIS. (Note: Under Mexican law, the authorities can pursue anIP violation only after receiving a complaint from theright-holder.) Eli Lilly found a receptive audience in Dr. LucioGalileo Lastra Martn, the new COFEPRIS Commissioner for SanitaryOperations and a former PRI Congressman. Dr. Lastra took on thecase, coordinated the Mexican interagency efforts, and launched asuccessful, unprecedented raid.

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8. (SBU) This enforcement action reveals a big change withinCOFEPRIS; at the anti-counterfeit pharmaceuticals symposiumsponsored by APEC and held in Mexico City last March, COFEPRISGeneral Commissioner Miguel Angel Toscano told the audience thatcounterfeit drugs were not a problem in Mexico. While the extent ofthe problem may be disputed, COFEPRIS now seems to recognize thatcounterfeit pharmaceuticals are indeed a public health hazard inMexico and is actively working to combat it. Commissioner Toscanoalso participated in the same DOJ-sponsored tour of the IPRCoordination Center mentioned above.

9. (SBU) In both actions, the security of those involved was aparamount concern. Eli Lilly's General Counsel told EconOff that heand his colleagues feared repercussions from Mexico's criminal gangsif these organizations learned that Eli Lilly was behind thecomplaint. Therefore, Eli Lilly is very pleased at the effectivemanner in which COFEPRIS has obfuscated their participation. As forthe customs operation, it was not too long ago that the customsdirector for the Gulf Coast port of Veracruz disappeared, ostensiblyfor detaining a shipment of illicit goods bound for one of Mexico'scriminal organizations. Fortunately, Aduanas Administrator Martineztold EconOff that as Lazaro Cardenas was not the final destinationfor many of these TEU's, the cartels do not appear to be involved.So far, his officers have not been threatened.

10. (SBU) Both these enforcement efforts are commendable, andsignal that Mexican authorities are increasingly capable of andwilling to protect and enforce intellectual property rights.However, Mexico must do more to enhance its enforcement efforts.Mexico must devote greater resources to its enforcement agencies, itmust improve its interagency coordination, and it must continue tobuild a consistent record of aggressive prosecutions anddeterrent-level penalties imposed by courts. To these ends, we willcontinue our training and cooperative efforts. END COMMENT.